RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
between
ARCADIA RECEIVABLES FINANCE CORP.
Purchaser
and
ARCADIA FINANCIAL LTD.
Seller
dated as of
November 1, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1. General . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2. Specific Terms. . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.3. Usage of Terms. . . . . . . . . . . . . . . . . . . . . . .4
SECTION 1.4. Certain References. . . . . . . . . . . . . . . . . . . . .4
SECTION 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 1.6. Action by or Consent of Noteholders . . . . . . . . . . . .4
SECTION 1.7. Material Adverse Effect . . . . . . . . . . . . . . . . . .5
ARTICLE II - CONVEYANCE OF THE INITIAL RECEIVABLES
AND THE INITIAL OTHER CONVEYED PROPERTY. . . . . . . . . . . . . . . . . . . .5
SECTION 2.1. Conveyance of the Initial Receivables and the Initial
Other Conveyed Property. . . . . . . . . . . . . . . . . . .5
SECTION 2.2. Purchase Price of Initial Receivables . . . . . . . . . . .5
SECTION 2.3. Conveyance of Subsequent Receivables and Subsequent
Other Conveyed Property. . . . . . . . . . . . . . . . . . .6
ARTICLE III - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . .8
SECTION 3.1. Representations and Warranties of AFL . . . . . . . . . . .8
SECTION 3.2. Representations and Warranties of ARFC. . . . . . . . . . .9
ARTICLE IV - COVENANTS OF AFL. . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.1. Protection of Title of ARFC and the Trust . . . . . . . . 11
SECTION 4.2. Other Liens or Interests. . . . . . . . . . . . . . . . . 13
SECTION 4.3. Costs and Expenses. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.4. Indemnification . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V - REPURCHASES. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.1. Repurchase of Receivables Upon Breach of Warranty . . . . 15
SECTION 5.2. Reassignment of Purchased Receivables . . . . . . . . . . 16
SECTION 5.3. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.1. Liability of AFL. . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2. Failure of AFL to Sell Subsequent Receivables . . . . . . 16
SECTION 6.3. Merger or Consolidation of AFL or ARFC. . . . . . . . . . 16
SECTION 6.4. Limitation on Liability of AFL and Others . . . . . . . . 17
SECTION 6.5. AFL May Own Notes . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.6. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.8. Merger and Integration. . . . . . . . . . . . . . . . . . 19
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SECTION 6.9. Severability of Provisions. . . . . . . . . . . . . . . . 19
SECTION 6.10. Intention of the Parties. . . . . . . . . . . . . . . . . 19
SECTION 6.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.13. Conveyance of the Initial Receivables and the Initial
Other Conveyed Property to the Trust . . . . . . . . . . . 20
SECTION 6.14. Nonpetition Covenant. . . . . . . . . . . . . . . . . . . 20
SCHEDULES
Schedule A -- Schedule of Initial Receivables
Schedule B -- Representations and Warranties of AFL
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RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
THIS RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT, dated as of
November 1, 1998, executed between Arcadia Receivables Finance Corp., a Delaware
corporation, as purchaser ("ARFC"), and Arcadia Financial Ltd., a Minnesota
corporation, as seller ("AFL").
W I T N E S S E T H:
WHEREAS, ARFC has agreed to purchase from AFL and AFL, pursuant to one
or more Assignments pursuant to an Amended and Restated Receivables Purchase
Agreement and Assignment, dated as of July 21, 1998, between ARFC and AFL (the
"BOA Purchase Agreement"), has transferred to ARFC certain of the Initial
Receivables and Initial Other Conveyed Property;
WHEREAS, ARFC has agreed to purchase from AFL and AFL, pursuant to
this Agreement, is transferring to ARFC the remainder of the Initial Receivables
and Initial Other Conveyed Property; and
WHEREAS, ARFC has agreed to purchase (or has purchased) from AFL and
AFL has agreed to transfer (or has transferred) to ARFC the Subsequent
Receivables and Subsequent Other Conveyed Property in an amount set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, ARFC and AFL, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. GENERAL. The specific terms defined in this Article
include the plural as well as the singular. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Sale and Servicing Agreement, dated as of
November 1, 1998, by and among Arcadia Receivables Finance Corp. (as Seller),
Arcadia Financial Ltd. (in its individual capacity and as Servicer), Arcadia
Automobile Receivables Trust, 1998-D (as Issuer) (the "Trust") and
Norwest Bank Minnesota, National Association, a national banking association (as
Backup Servicer).
SECTION 1.2. SPECIFIC TERMS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"AGREEMENT" shall mean this Receivables Purchase Agreement and
Assignment and all amendments hereof and supplements hereto.
"CLOSING DATE" means November 19, 1998.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
Association, a national banking association, as trustee and indenture collateral
agent under the Indenture, dated as of November 1, 1998, between the Trust, the
Indenture Trustee and the Indenture Collateral Agent.
"INITIAL OTHER CONVEYED PROPERTY" means all monies at any time paid or
payable on the Initial Receivables or in respect thereof after the Initial
Cutoff Date (including amounts due on or before the Initial Cutoff Date but
received by AFL after the Initial Cutoff Date), an assignment of security
interests in the Financed Vehicles, the Collection Account (including all
Eligible Investments therein and all proceeds therefrom), the Subcollection
Account, the Insurance Policies and any proceeds from any Insurance Policies
relating to the Initial Receivables, the Obligors or the related Financed
Vehicles, including rebates of premiums, rights under any Collateral Insurance
and any Force-Placed Insurance relating to the Initial Receivables, an
assignment of the rights of AFL against Dealers with respect to the Initial
Receivables under the Dealer Agreements and the Dealer Assignments, all items
contained in the Receivable Files relating to the Initial Receivables, any and
all other documents or electronic records that AFL keeps on file in accordance
with its customary procedures relating to the Initial Receivables, the Obligors
or the related Financed Vehicles, property (including the right to receive
future Liquidation Proceeds) that secures an Initial Receivable and that has
been acquired by or on behalf of the Trust pursuant to liquidation of such
Initial Receivable, and all proceeds of the foregoing.
"INITIAL RECEIVABLES" means the Receivables listed on the Schedule of
Initial Receivables attached hereto as Schedule A.
"INITIAL SPREAD ACCOUNT DEPOSIT" means $0.
"INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement,
dated as of November 19, 1998, among the Security Insurer, the Trust, ARFC and
AFL.
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"LIQUIDATED DAMAGES" means an amount equal to the sum of the Class A-1
Prepayment Premium, the Class A-2 Prepayment Premium, the Class A-3 Prepayment
Premium and the Class A-4 Prepayment Premium.
"OTHER CONVEYED PROPERTY" means the Initial Other Conveyed Property
conveyed by AFL to ARFC pursuant to this Agreement together with any and all
Subsequent Other Conveyed Property conveyed by AFL to ARFC pursuant to each
Subsequent Purchase Agreement.
"OWNER TRUSTEE" means Wilmington Trust Company, a Delaware
corporation, not in its individual capacity but solely as trustee of the Trust,
and any successor trustee appointed and acting pursuant to the Trust Agreement.
"RELATED DOCUMENTS" means the Notes, the Custodian Agreement, the
Trust Agreement, the Administration Agreement, the Indenture, each Subsequent
Purchase Agreement, the Sale and Servicing Agreement, each Subsequent Transfer
Agreement, the Note Policy, the Spread Account Agreement, the Insurance
Agreement, the Lockbox Agreement and the Underwriting Agreement among AFL, ARFC
and the underwriters of the Notes. The Related Documents to be executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"REPURCHASE EVENT" means the occurrence of a breach of any of AFL's
representations and warranties hereunder or under any Subsequent Purchase
Agreement or any other event which requires the repurchase of a Receivable by
AFL under the Sale and Servicing Agreement.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of November 1, 1998, executed and delivered by Arcadia Receivables
Finance Corp., as Seller, Arcadia Financial Ltd., in its individual capacity and
as Servicer, Arcadia Automobile Receivables Trust, 1998-D, as Issuer, and
Norwest Bank Minnesota, National Association, as Backup Servicer.
"SCHEDULE OF INITIAL RECEIVABLES" means the schedule of all retail
installment sales contracts and promissory notes sold and transferred pursuant
to this Agreement which is attached hereto as Schedule A.
"SCHEDULE OF RECEIVABLES" means the Schedule of Initial Receivables
attached hereto as Schedule A as supplemented by each Schedule of Subsequent
Receivables attached to each Subsequent Purchase Agreement as Schedule A.
"SCHEDULE OF REPRESENTATIONS" means the Schedule of Representations
and Warranties attached hereto as Schedule B.
"SCHEDULE OF SUBSEQUENT RECEIVABLES" means the schedule of all retail
installment sales contracts and promissory notes sold and transferred pursuant
to a Subsequent Purchase
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Agreement which is attached to such Subsequent Purchase Agreement as Schedule A,
which Schedule of Subsequent Receivables shall supplement the Schedule of
Initial Receivables.
"SPREAD ACCOUNT" means the Spread Account established and maintained
pursuant to the Spread Account Agreement. The Spread Account shall in no event
be deemed to be part of the Trust Property.
"SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement, dated
as of March 25, 1993, as thereafter amended and restated, among AFL, ARFC, the
Security Insurer, the Collateral Agent and the trustees specified therein, as
the same may be amended, supplemented or otherwise modified in accordance with
the terms thereof.
"SUBSEQUENT OTHER CONVEYED PROPERTY" means the Subsequent Other
Conveyed Property conveyed by AFL to ARFC pursuant to each Subsequent Purchase
Agreement.
"SUBSEQUENT RECEIVABLES" means the Receivables specified in the
Schedule of Subsequent Receivables attached as Schedule A to each Subsequent
Purchase Agreement.
"TRUST" means the trust created by the Trust Agreement, the estate of
which consists of the Trust Property.
"TRUST PROPERTY" means the property and proceeds of every description
conveyed pursuant to Section 2.5 of the Trust Agreement, Sections 2.1 and 2.4 of
the Sale and Servicing Agreement and Section 2.1 hereof and pursuant to any
Subsequent Purchase Agreement and Subsequent Transfer Agreement, together with
the Trust Accounts (including all Eligible Investments therein and all proceeds
therefrom). Although ARFC has pledged the Spread Account to the Collateral
Agent pursuant to the Spread Account Agreement, the Spread Account shall not
under any circumstances be deemed to be a part of or otherwise includable in the
Trust or the Trust Property.
SECTION 1.3. USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Sale and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
SECTION 1.4. CERTAIN REFERENCES. All references to the Principal
Balance of a Receivable as of an Accounting Date shall refer to the close of
business on such day, or as of the first day of a Monthly Period shall refer to
the opening of business on such day. All references to the last day of a
Monthly Period shall refer to the close of business on such day.
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SECTION 1.5. NO RECOURSE. Without limiting the obligations of AFL
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of AFL, or
of any predecessor or successor of AFL.
SECTION 1.6. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by Noteholders. Solely for the purposes of any action
to be taken, or consented to, by Noteholders, any Note registered in the name of
the Seller, AFL or any Affiliate thereof shall be deemed not to be outstanding,
and the related Outstanding Amount, evidenced thereby shall not be taken into
account in determining whether the requisite Outstanding Amount necessary to
effect any such action or consent has been obtained; PROVIDED, HOWEVER, that,
solely for the purpose of determining whether the Indenture Trustee is entitled
to rely upon any such action or consent, only Notes which the Indenture Trustee
knows to be so owned shall be so disregarded.
SECTION 1.7. MATERIAL ADVERSE EFFECT. Whenever a determination is to
be made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material adverse
effect on the Trust or the Noteholders (or any similar or analogous
determination), such determination shall be made without taking into account the
funds available from claims under the Note Policy.
ARTICLE II
CONVEYANCE OF THE INITIAL RECEIVABLES
AND THE INITIAL OTHER CONVEYED PROPERTY
SECTION 2.1. CONVEYANCE OF THE INITIAL RECEIVABLES AND THE INITIAL
OTHER CONVEYED PROPERTY. Subject to the terms and conditions of this Agreement,
AFL hereby sells, transfers, assigns, and otherwise conveys to ARFC without
recourse (but without limitation of its obligations in this Agreement), and ARFC
hereby purchases, all right, title and interest of AFL in and to the Initial
Receivables and the Initial Other Conveyed Property. AFL and ARFC acknowledge
that certain of the Initial Receivables and Initial Other Conveyed Property have
previously been sold, transferred, assigned and conveyed to ARFC pursuant to the
Telluride Purchase Agreement, and AFL hereby confirms such prior sale, transfer,
assignment and conveyance. It is the intention of AFL and ARFC that the
transfer and assignment contemplated by this Agreement shall constitute a sale
of the Initial Receivables and the Initial Other Conveyed Property from AFL to
ARFC, conveying good title thereto free and clear of any Liens, and the Initial
Receivables and the Initial Other Conveyed Property shall not be part of AFL's
estate in the event of the filing of a bankruptcy petition by or against AFL
under any bankruptcy or similar law.
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SECTION 2.2. PURCHASE PRICE OF INITIAL RECEIVABLES. Simultaneously
with the conveyance of the Initial Receivables and the Initial Other Conveyed
Property to ARFC, ARFC has paid or caused to be paid to or upon the order of AFL
approximately $146,539,107.38 by wire transfer of immediately available funds
(representing the proceeds to ARFC from the sale of the Initial Receivables
after (i) deducting expenses of $725,000 incurred by ARFC in connection with
such sale, (ii) depositing the Pre-Funded Amount in the Pre-Funding Account and
(iii) depositing the Reserve Amount in the Reserve Account).
SECTION 2.3. CONVEYANCE OF SUBSEQUENT RECEIVABLES AND SUBSEQUENT
OTHER CONVEYED PROPERTY.
(a) Subject to the conditions set forth in paragraph (b) below and
the terms and conditions in the related Subsequent Purchase Agreement, in
consideration of AFL's delivery on the related Subsequent Transfer Date to or
upon the order of ARFC of an amount equal to the purchase price of the
Subsequent Receivables (as set forth in the related Subsequent Purchase
Agreement), AFL hereby agrees to sell, transfer, assign, and otherwise convey to
ARFC without recourse (but without limitation of its obligations in this
Agreement and the related Subsequent Purchase Agreement), and ARFC hereby agrees
to purchase all right, title and interest of AFL in and to the Subsequent
Receivables and the Subsequent Other Conveyed Property described in the related
Subsequent Purchase Agreement.
(b) AFL shall transfer to ARFC, and ARFC shall acquire, the
Subsequent Receivables and the Subsequent Other Conveyed Property to be
transferred on any Subsequent Transfer Date only upon the satisfaction of each
of the following conditions on or prior to such Subsequent Transfer Date:
(i) ARFC shall have provided the Owner Trustee, the Indenture
Trustee, the Security Insurer and the Rating Agencies with a timely
Addition Notice and shall have provided any information reasonably
requested by any of the foregoing with respect to the Subsequent
Receivables;
(ii) the Funding Period shall not have terminated;
(iii) the Security Insurer (so long as an Insurer Default shall
not have occurred and be continuing) shall in its sole and absolute
discretion have given its prior written approval of the transfer of the
Subsequent Receivables and the Subsequent Other Conveyed Property by AFL to
ARFC and, in turn, by ARFC to the Trust;
(iv) ARFC shall have delivered to AFL a duly executed
Subsequent Receivables Purchase Agreement and Assignment, in substantially
the form of Exhibit A hereto (the "Subsequent Purchase Agreement"), which
shall include a Schedule of Subsequent Receivables;
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(v) as of each Subsequent Transfer Date, neither AFL nor ARFC
was insolvent nor will either of them have been made insolvent by such
transfer nor is either of them aware of any pending insolvency;
(vi) each Rating Agency shall have notified the Security
Insurer that following such transfer the Notes will be rated in the highest
rating category by such Rating Agency;
(vii) such addition will not result in a material adverse tax
consequence to the Trust or the Noteholders as evidenced by an Opinion of
Counsel to be delivered by AFL;
(viii) ARFC shall have delivered to the Rating Agencies and to
the Security Insurer one or more Opinions of Counsel with respect to the
transfer of the Subsequent Receivables substantially in the form of the
Opinions of Counsel delivered to such persons on the Closing Date;
(ix) (A) the Receivables in the Trust, including the Subsequent
Receivables to be conveyed by AFL to ARFC and, in turn, by ARFC to the
Trust on the Subsequent Transfer Date, shall meet the following criteria
(based on the characteristics of the Initial Receivables on the Initial
Cutoff Date and the Subsequent Receivables on each related Subsequent
Cutoff Date): (1) the weighted average APR of such Receivables will not be
less than 15.505%, (2) the weighted average remaining term of such
Receivables will not be more than 67 nor less than 60 months, (3) not more
than 90% of the Aggregate Principal Balance of such Receivables will
represent used Financed Vehicles, (4) not more than 3% of the Aggregate
Principal Balance of such Receivables will be attributable to Receivables
with an Annual Percentage Rate in excess of 21%, (5) not more than 0.25% of
the Aggregate Principal Balance of such Receivables will represent loans on
Financed Vehicles in excess of $50,000.00, (6) not more than 3% of the
Aggregate Principal Balance of such Receivables will represent loans with
original terms greater than 72 months and (7) not more than 2.0% of the
Aggregate Principal Balance of such Receivables will represent loans
secured by Financed Vehicles that previously secured a loan originated by
AFL with an obligor other than the current Obligor, and (B) the Trust, the
Owner Trustee, the Indenture Trustee and the Security Insurer shall have
received written confirmation from a firm of certified independent public
accountants as to the satisfaction of such criteria;
(x) AFL shall have taken any action necessary, or if requested
by the Security Insurer, advisable to maintain the first perfected
ownership interest of the Trust in the Trust Property and the first
perfected security interest of ARFC in the Subsequent Receivables and the
Subsequent Other Conveyed Property, the Trust in the Trust Property and the
first perfected security interest of the Indenture Collateral Agent in the
Indenture Collateral;
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(xi) AFL is conveying Subsequent Receivables to the Seller in
substantially the order they were originated by AFL; and
(xii) no selection procedures believed by AFL to be adverse to
the interests of the Noteholders shall have been utilized in selecting the
Subsequent Receivables.
It is the intention of AFL and ARFC that the transfer and assignment
contemplated by this Agreement and the related Subsequent Purchase Agreement
shall constitute a sale of the Subsequent Receivables and the Subsequent Other
Conveyed Property from AFL to ARFC, conveying good title thereto free and clear
of any Liens, and the Subsequent Receivables and the Subsequent Other Conveyed
Property shall not be part of AFL's estate in the event of the filing of a
bankruptcy petition by or against AFL under any bankruptcy or similar law.
(c) AFL covenants to transfer to ARFC pursuant to paragraph (a) above
Subsequent Receivables with an aggregate Principal Balance equal to
$52,477,400.72; PROVIDED, HOWEVER, that the sole remedy of ARFC with respect to
a failure of such covenant shall be to enforce the provisions of Section 6.2 of
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF AFL. AFL makes the
following representations and warranties, on which ARFC relies in purchasing the
Initial Receivables and the Initial Other Conveyed Property and in transferring
the Initial Receivables and the Initial Other Conveyed Property to the Trust
under the Sale and Servicing Agreement and on which the Security Insurer will
rely in issuing the Note Policy. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Initial Receivables and the Initial Other Conveyed
Property hereunder and the sale, transfer and assignment thereof by ARFC to the
Trust under the Sale and Servicing Agreement. AFL and ARFC agree that ARFC will
assign to the Trust all of ARFC's rights under this Agreement and that the Trust
will thereafter be entitled to enforce this Agreement against AFL in the Trust's
own name.
(a) SCHEDULE OF REPRESENTATIONS. The representations and warranties
set forth on the Schedule of Representations are true and correct.
(b) ORGANIZATION AND GOOD STANDING. AFL has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Minnesota, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to acquire, own and sell the Initial
Receivables and the Initial Other Conveyed Property transferred to ARFC.
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(c) DUE QUALIFICATION. AFL is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) POWER AND AUTHORITY. AFL has the power and authority to execute
and deliver this Agreement and its Related Documents and to carry out its
terms and their terms, respectively; AFL has full power and authority to
sell and assign the Initial Receivables and the Initial Other Conveyed
Property to be sold and assigned to and deposited with ARFC hereunder and
has duly authorized such sale and assignment to ARFC by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and AFL's Related Documents have been duly authorized by AFL by
all necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and AFL's
Related Documents have been duly executed and delivered, shall effect a
valid sale, transfer and assignment of the Initial Receivables and the
Initial Other Conveyed Property, enforceable against AFL and creditors of
and purchasers from AFL; and this Agreement and AFL's Related Documents
constitute legal, valid and binding obligations of AFL enforceable in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under, the
articles of incorporation or bylaws of AFL, or any indenture, agreement,
mortgage, deed of trust or other instrument to which AFL is a party or by
which it is bound, or result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement, the Spread Account Agreement and the Sale and Servicing
Agreement, or violate any law, order, rule or regulation applicable to AFL
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over AFL
or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to AFL's knowledge, threatened against AFL, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over AFL or its properties
(i) asserting the invalidity of this Agreement or any of the Related
Documents, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (iii) seeking any determination or ruling
that might materially and
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adversely affect the performance by AFL of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Receivables and the Initial Other Conveyed
Property hereunder or under the Sale and Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICE. The chief executive office of AFL is
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF ARFC. ARFC makes the
following representations and warranties, on which AFL relies in selling,
assigning, transferring and conveying the Initial Receivables and the Initial
Other Conveyed Property to ARFC hereunder. Such representations are made as of
the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Initial Receivables and the Initial Other
Conveyed Property hereunder and the sale, transfer and assignment thereof by
ARFC to the Trust under the Sale and Servicing Agreement.
(a) ORGANIZATION AND GOOD STANDING. ARFC has been duly organized and
is validly existing and in good standing as a corporation under the laws of
the State of Delaware, with the power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and has,
full power, authority and legal right to acquire and own the Initial
Receivables and the Initial Other Conveyed Property and to transfer the
Initial Receivables and the Initial Other Conveyed Property to the Trust
pursuant to the Sale and Servicing Agreement.
(b) DUE QUALIFICATION. ARFC is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect (i) ARFC's ability to acquire the
Initial Receivables or the Initial Other Conveyed Property, (ii) the
validity or enforceability of the Initial Receivables and the Initial Other
Conveyed Property or (iii) ARFC's ability to perform its obligations
hereunder and under the Related Documents.
(c) POWER AND AUTHORITY. ARFC has the power, authority and legal
right to execute and deliver this Agreement and its Related Documents and
to carry out the terms hereof and thereof and to acquire the Initial
Receivables and the Initial Other Conveyed Property hereunder; and the
execution, delivery and performance of this Agreement and its Related
Documents and all of the documents required pursuant hereto or thereto have
been duly authorized by ARFC by all necessary action.
(d) NO CONSENT REQUIRED. ARFC is not required to obtain the consent
of any other Person, or any consent, license, approval or authorization or
registration or declaration with, any governmental authority, bureau or
agency in connection with the
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execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made.
(e) BINDING OBLIGATION. This Agreement and each of its Related
Documents constitutes a legal, valid and binding obligation of ARFC,
enforceable against ARFC in accordance with its terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to
general equitable principles.
(f) NO VIOLATION. The execution, delivery and performance by ARFC of
this Agreement, the consummation of the transactions contemplated by this
Agreement and the Related Documents and the fulfillment of the terms of
this Agreement and the Related Documents do not and will not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time) a default under the certificate
of incorporation or bylaws of ARFC, or conflict with or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any indenture, agreement, mortgage, deed of trust or
other instrument to which ARFC is a party or by which ARFC is bound or to
which any of its properties are subject, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument
(other than the Sale and Servicing Agreement and the Indenture), or violate
any law, order, rule or regulation, applicable to ARFC or its properties,
of any federal or state regulatory body or any court, administrative
agency, or other governmental instrumentality having jurisdiction over ARFC
or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the knowledge of ARFC, threatened against ARFC, before any
court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over ARFC or its
properties: (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by ARFC of its obligations under, or
the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) that may adversely affect the federal or state income tax
attributes of, or seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the Initial Receivables
and the Initial Other Conveyed Property hereunder or the transfer of the
Initial Receivables and the Initial Other Conveyed Property to the Trust
pursuant to the Sale and Servicing Agreement.
In the event of any breach of a representation and warranty made by ARFC
hereunder, AFL covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the later of (i) the date on which
all pass-through certificates or other similar securities issued by the
Trust, or a trust or similar vehicle formed by ARFC, have been paid in full,
or (ii) all Notes or other similar
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securities issued by the Trust, or a trust or similar vehicle formed by ARFC,
have been paid in full. AFL and ARFC agree that damages will not be an
adequate remedy for such breach and that this covenant may be specifically
enforced by ARFC or by the Owner Trustee on behalf of the Trust.
ARTICLE IV
COVENANTS OF AFL
SECTION 4.1. PROTECTION OF TITLE OF ARFC AND THE TRUST.
(a) At or prior to the Closing Date or each Subsequent Transfer Date,
as the case may be, AFL shall have filed or caused to be filed a UCC-1 financing
statement, executed by AFL as seller or debtor, naming ARFC as purchaser or
secured party and describing the Initial Receivables and the Initial Other
Conveyed Property, with respect to this Agreement, and the Subsequent
Receivables and the Subsequent Other Conveyed Property, with respect to each
Subsequent Purchase Agreement, being sold by it to ARFC as collateral, with the
office of the Secretary of State of the State of Minnesota and in such other
locations as ARFC shall have required. From time to time thereafter, AFL shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of ARFC
under this Agreement and each Subsequent Purchase Agreement and of the Trust
under the Sale and Servicing Agreement and each Subsequent Transfer Agreement in
the Initial Receivables and the Initial Other Conveyed Property and the
Subsequent Receivables and the Subsequent Other Conveyed Property, as the case
may be, and in the proceeds thereof. AFL shall deliver (or cause to be
delivered) to ARFC, the Owner Trustee, the Indenture Trustee and the Security
Insurer file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing. In the event that
AFL fails to perform its obligations under this subsection, ARFC or the Owner
Trustee may do so at the expense of AFL.
(b) AFL shall not change its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by AFL (or by ARFC or the Owner Trustee on behalf
of AFL) in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given ARFC, the
Owner Trustee and the Security Insurer at least 60 days' prior written notice
thereof, and shall promptly file appropriate amendments to all previously filed
financing statements and continuation statements.
(c) AFL shall give ARFC, the Security Insurer (so long as an Insurer
Default shall not have occurred and be continuing), the Indenture Trustee and
the Owner Trustee at least 60 days' prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement.
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AFL shall at all times maintain each office from which it services Receivables
and its principal executive office within the United States of America.
(d) AFL shall maintain its computer systems so that, from and after
the time of sale under this Agreement of the Initial Receivables to ARFC, and
from and after the time of sale under each Subsequent Purchase Agreement of the
Subsequent Receivables to ARFC, and the conveyance of the Initial Receivables
and the Subsequent Receivables by ARFC to the Trust, AFL's master computer
records (including archives) that shall refer to an Initial Receivable or
Subsequent Receivable indicate clearly that such Initial Receivable or
Subsequent Receivable has been sold to ARFC and has been conveyed by ARFC to the
Trust. Indication of the Trust's ownership of an Initial Receivable or
Subsequent Receivable shall be deleted from or modified on AFL's computer
systems when, and only when, the Initial Receivable or Subsequent Receivable
shall become a Purchased Receivable or shall have been paid in full.
(e) If at any time AFL shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle receivables to
any prospective purchaser, lender or other transferee, AFL shall give to such
prospective purchaser, lender, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Initial Receivable or Subsequent Receivable, shall
indicate clearly that such Initial Receivable or Subsequent Receivable has been
sold to ARFC and is owned by the Trust.
SECTION 4.2. OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder and under any Subsequent Purchase Agreement, AFL will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on the Initial Receivables or the Initial Other
Conveyed Property or on the Subsequent Receivables or the Subsequent Other
Conveyed Property, or any interest therein, and AFL shall defend the right,
title, and interest of ARFC and the Trust in and to the Initial Receivables and
the Initial Other Conveyed Property and the Subsequent Receivables and the
Subsequent Other Conveyed Property against all claims of third parties claiming
through or under AFL.
SECTION 4.3. COSTS AND EXPENSES. AFL shall pay all reasonable costs
and disbursements in connection with the performance of its obligations
hereunder and under each Subsequent Purchase Agreement and its Related
Documents.
SECTION 4.4. INDEMNIFICATION.
(a) AFL shall defend, indemnify and hold harmless ARFC, the Trust,
the Owner Trustee, the Security Insurer, the Indenture Trustee, the Backup
Servicer and the Noteholders from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting from any
breach of any of AFL's representations and warranties contained herein or in any
Subsequent Purchase Agreement.
(b) AFL shall defend, indemnify and hold harmless ARFC, the Trust,
the Owner Trustee, the Indenture Trustee, the Backup Servicer and the
Noteholders from and against
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any and all costs, expenses, losses, damages, claims, and liabilities, arising
out of or resulting from the use, ownership or operation by AFL or any affiliate
thereof of a Financed Vehicle.
(c) AFL shall defend and indemnify ARFC, the Trust, the Owner
Trustee, the Security Insurer, the Indenture Trustee, the Backup Servicer and
the Noteholders against any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from any action taken, or failed to be
taken, by it in respect of any portion of the Trust Property other than in
accordance with this Agreement, each Subsequent Purchase Agreement or the Sale
and Servicing Agreement and each Subsequent Transfer Agreement.
(d) AFL agrees to pay, and shall defend, indemnify and hold harmless
ARFC, the Trust, the Owner Trustee, the Indenture Trustee, the Backup Servicer
and the Noteholders from and against any taxes that may at any time be asserted
against ARFC, the Owner Trustee, the Indenture Trustee, the Backup Servicer and
the Noteholders with respect to the transactions contemplated in this Agreement
or in any Subsequent Purchase Agreement, including, without limitation, any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale, transfer and assignment of the
Initial Receivables and the Initial Other Conveyed Property or the Subsequent
Receivables or Subsequent Other Conveyed Property to ARFC and of the Trust
Property to the Trust or the issuance and original sale of the Notes, or
asserted with respect to ownership of the Initial Receivables and Initial Other
Conveyed Property or the Subsequent Receivables or Subsequent Other Conveyed
Property or the Trust Property which shall be indemnified by AFL pursuant to
clause (e) below, or federal, state or other income taxes, arising out of
distributions on the Notes or transfer taxes arising in connection with the
transfer of the Notes) and costs and expenses in defending against the same,
arising by reason of the acts to be performed by AFL under this Agreement or
under any Subsequent Purchase Agreement or imposed against such Persons.
(e) AFL agrees to pay, and to indemnify, defend and hold harmless
ARFC, the Trust, the Owner Trustee, the Indenture Trustee, the Backup Servicer
and the Noteholders from, any taxes which may at any time be asserted against
such Persons with respect to, and as of the date of, the conveyance or ownership
of the Initial Receivables or the Initial Other Conveyed Property hereunder or
the Subsequent Receivables or Subsequent Other Conveyed Property under each
Subsequent Purchase Agreement and the conveyance or ownership of the Trust
Property under the Sale and Servicing Agreement and the Subsequent Transfer
Agreements or the issuance and original sale of the Notes, including, without
limitation, any sales, gross receipts, personal property, tangible or intangible
personal property, privilege or license taxes (but not including any federal or
other income taxes, including franchise taxes, arising out of the transactions
contemplated hereby or transfer taxes arising in connection with the transfer of
Notes) and costs and expenses in defending against the same, arising by reason
of the acts to be performed by AFL under this Agreement or under any Subsequent
Purchase Agreement or imposed against such Persons.
(f) AFL shall defend, indemnify, and hold harmless ARFC, the Owner
Trustee, the Security Insurer, the Indenture Trustee, the Backup Servicer, the
Trust and the
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Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon ARFC, the Trust, the
Indenture Trustee and the Noteholders through the negligence, willful
misfeasance, or bad faith of AFL in the performance of its duties under this
Agreement or under any Subsequent Purchase Agreement or by reason of reckless
disregard of AFL's obligations and duties under this Agreement or under any
Subsequent Purchase Agreement.
(g) AFL shall indemnify, defend and hold harmless ARFC, the Owner
Trustee, the Security Insurer, the Indenture Trustee, the Backup Servicer, the
Trust and the Noteholders from and against any loss, liability or expense
incurred by reason of the violation by AFL of federal or state securities laws
in connection with the registration or the sale of the Notes.
(h) AFL shall indemnify, defend and hold harmless ARFC, the Owner
Trustee, the Security Insurer, the Indenture Trustee, the Backup Servicer, the
Trust and the Noteholders from and against any loss, liability or expense
imposed upon, or incurred by, ARFC, the Owner Trustee, the Indenture Trustee,
the Trust or the Noteholders as a result of the failure of any Initial
Receivable or Subsequent Receivable, or the sale of the related Financed
Vehicle, to comply with all requirements of applicable law.
(i) AFL shall defend, indemnify, and hold harmless ARFC from and
against all costs, expenses, losses, claims, damages, and liabilities arising
out of or incurred in connection with the acceptance or performance of AFL's
trusts and duties as Servicer under the Sale and Servicing Agreement, except to
the extent that such cost, expense, loss, claim, damage, or liability shall be
due to the willful misfeasance, bad faith, or negligence (except for errors in
judgment) of ARFC.
(j) AFL shall indemnify, defend and hold harmless ARFC, the Owner
Trustee, the Indenture Trustee, the Backup Servicer, the Trust and the
Noteholders from and against any loss, liability or expense imposed upon, or
incurred by, ARFC, the Owner Trustee and the Indenture Trustee, the Trust and
the Noteholders as a result of AFL's or ARFC's use of the name "Arcadia."
Indemnification under this Section 4.4 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive termination
of the Trust. The indemnity obligations hereunder shall be in addition to any
obligation that AFL may otherwise have.
ARTICLE V
REPURCHASES
SECTION 5.1. REPURCHASE OF RECEIVABLES UPON BREACH OF WARRANTY. Upon
the occurrence of a Repurchase Event AFL shall, unless such breach shall have
been cured in all material respects, repurchase such Receivable from the Trust
and, on or before the related
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Deposit Date, AFL shall pay the Purchase Amount to the Trust pursuant to Section
4.5 of the Sale and Servicing Agreement. It is understood and agreed that,
except as set forth in Section 6.1, the obligation of AFL to repurchase any
Receivable as to which a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against AFL for such breach
available to ARFC, the Security Insurer, Noteholders, or the Indenture Trustee
on behalf of Noteholders. The provisions of this Section 5.1 are intended to
grant the Owner Trustee and the Indenture Trustee a direct right against AFL to
demand performance hereunder, and in connection therewith, AFL waives any
requirement of prior demand against ARFC with respect to such repurchase
obligation. Any such purchase shall take place in the manner specified in
Section 2.6 of the Sale and Servicing Agreement. Notwithstanding any other
provision of this Agreement, any Subsequent Purchase Agreement or the Sale and
Servicing Agreement or any Subsequent Transfer Agreement to the contrary, the
obligation of AFL under this Section shall not terminate upon a termination of
AFL as Servicer under the Sale and Servicing Agreement and shall be performed in
accordance with the terms hereof notwithstanding the failure of the Servicer or
ARFC to perform any of their respective obligations with respect to such
Receivable under the Sale and Servicing Agreement.
In addition to the foregoing and notwithstanding whether the related
Receivable shall have been purchased by AFL, AFL shall indemnify the Owner
Trustee, the Indenture Trustee, the Backup Servicer, the Security Insurer, the
Trust and the Noteholders against all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such Repurchase Events.
SECTION 5.2. REASSIGNMENT OF PURCHASED RECEIVABLES. Upon deposit in
the Collection Account of the Purchase Amount of any Receivable repurchased by
AFL under Section 5.1, ARFC and the Owner Trustee shall take such steps as may
be reasonably requested by AFL in order to assign to AFL all of ARFC's and the
Trust's right, title and interest in and to such Receivable and all security and
documents and all Other Conveyed Property conveyed to ARFC and the Trust
directly relating thereto, without recourse, representation or warranty, except
as to the absence of liens, charges or encumbrances created by or arising as a
result of actions of ARFC or the Owner Trustee. Such assignment shall be a sale
and assignment outright, and not for security. If, following the reassignment
of a Purchased Receivable, in any enforcement suit or legal proceeding, it is
held that AFL may not enforce any such Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce the Receivable,
ARFC and the Owner Trustee shall, at the expense of AFL, take such steps as AFL
deems reasonably necessary to enforce the Receivable, including bringing suit in
ARFC's or the Owner Trustee's name.
SECTION 5.3. WAIVERS. No failure or delay on the part of ARFC, or
the Owner Trustee as assignee of ARFC, in exercising any power, right or remedy
under this Agreement or under any Subsequent Purchase Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or future exercise thereof or the exercise of
any other power, right or remedy.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1. LIABILITY OF AFL. AFL shall be liable in accordance
herewith only to the extent of the obligations in this Agreement or in any
Subsequent Purchase Agreement specifically undertaken by AFL and the
representations and warranties of AFL.
SECTION 6.2. FAILURE OF AFL TO SELL SUBSEQUENT RECEIVABLES. In the
event that AFL shall fail to deliver and sell to ARFC any or all of the
Subsequent Receivables required under this Agreement, AFL shall be obligated to
pay to ARFC the Liquidated Damages on the Business Day immediately preceding the
Distribution Date on which the Funding Period ends (or, if the Funding Period
does not end on a Distribution Date, on the first Distribution Date following
the end of the Funding Period).
SECTION 6.3. MERGER OR CONSOLIDATION OF AFL OR ARFC. Any corporation
or other entity (i) into which AFL or ARFC may be merged or consolidated,
(ii) resulting from any merger or consolidation to which AFL or ARFC is a party
or (iii) succeeding to the business of AFL or ARFC, in the case of ARFC, which
corporation has a certificate of incorporation containing provisions relating to
limitations on business and other matters substantively identical to those
contained in ARFC's certificate of incorporation, provided that in any of the
foregoing cases such corporation shall execute an agreement of assumption to
perform every obligation of AFL or ARFC, as the case may be, under this
Agreement and each Subsequent Purchase Agreement and, whether or not such
assumption agreement is executed, shall be the successor to AFL or ARFC, as the
case may be, hereunder and under each such Subsequent Purchase Agreement
(without relieving AFL or ARFC of its responsibilities hereunder, if it survives
such merger or consolidation) without the execution or filing of any document or
any further act by any of the parties to this Agreement or each Subsequent
Purchase Agreement. Notwithstanding the foregoing, so long as an Insurer
Default shall not have occurred and be continuing, ARFC shall not merge or
consolidate with any other Person or permit any other Person to become the
successor to ARFC's business without the prior written consent of the Security
Insurer. AFL or ARFC shall promptly inform the other party, the Owner Trustee
and the Indenture Trustee and, so long as an Insurer Default shall not have
occurred and be continuing, the Security Insurer of such merger, consolidation
or purchase and assumption. Notwithstanding the foregoing, as a condition to
the consummation of the transactions referred to in clauses (i), (ii) and (iii)
above, (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Sections 3.1 and 3.2 and this
Agreement, or similar representation or warranty made in any Subsequent Purchase
Agreement, shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, or both, would
become an event of default under the Insurance Agreement, shall have occurred
and be continuing, (y) AFL or ARFC, as applicable, shall have delivered written
notice of such consolidation, merger or purchase and assumption to the Rating
Agencies prior to the consummation of such transaction and shall have delivered
to the Owner Trustee and the Indenture Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such
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agreement of assumption comply with this Section 6.3 and that all conditions
precedent, if any, provided for in this Agreement, or in each Subsequent
Purchase Agreement, relating to such transaction have been complied with, and
(z) AFL or ARFC, as applicable, shall have delivered to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel, stating that, in the opinion of
such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Owner Trustee in the Trust Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
SECTION 6.4. LIMITATION ON LIABILITY OF AFL AND OTHERS. AFL and any
director, officer, employee or agent may rely in good faith on the advice of
counsel or on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
AFL shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its obligations under this Agreement, any
Subsequent Purchase Agreement or its Related Documents and that in its opinion
may involve it in any expense or liability.
SECTION 6.5. AFL MAY OWN NOTES. Subject to the provisions of the
Sale and Servicing Agreement, AFL and any Affiliate of AFL may in its individual
or any other capacity become the owner or pledgee of Notes with the same rights
as it would have if it were not AFL or an Affiliate thereof.
SECTION 6.6. AMENDMENT.
(a) This Agreement and any Subsequent Purchase Agreement may be
amended by AFL and ARFC, so long as an Insurer Default shall not have occurred
and be continuing, with the prior written consent of the Security Insurer and
without the consent of the Owner Trustee, the Indenture Trustee or any of the
Noteholders (A) to cure any ambiguity or (B) to correct any provisions in this
Agreement or any such Subsequent Purchase Agreement; PROVIDED, HOWEVER, that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
Owner Trustee and the Indenture Trustee, adversely affect in any material
respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by AFL and
ARFC, so long as an Insurer Default shall not have occurred and be continuing,
with the prior written consent of the Security Insurer, the Owner Trustee and
the Indenture Trustee and a Note Majority, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders;
PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables, distributions that shall be required to be made on any
Note or the Note Interest Rate or (ii) reduce the aforesaid percentage required
to consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Notes then outstanding.
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(c) Prior to the execution of any such amendment or consent, AFL
shall have furnished written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee or the Indenture Trustee, as applicable, shall furnish written
notification of the substance of such amendment or consent to each Noteholder.
(e) It shall not be necessary for the consent of Noteholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders shall be subject to such
reasonable requirements as the Owner Trustee or the Indenture Trustee, as
applicable, may prescribe, including the establishment of record dates. The
consent of any Holder of a Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Note and of any Note issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Note.
SECTION 6.7. NOTICES. All demands, notices and communications to AFL
or ARFC hereunder shall be in writing, personally delivered, or sent by
telecopier (subsequently confirmed in writing), reputable overnight courier or
mailed by certified mail, return receipt requested, and shall be deemed to have
been given upon receipt (a) in the case of AFL, to Arcadia Financial Ltd., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, or such other address as shall be designated by AFL in a written notice
delivered to the other party or to the Owner Trustee or the Indenture Trustee,
as applicable, or (b) in case of ARFC, to Arcadia Receivables Finance Corp.,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 6.8. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.9. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.10. INTENTION OF THE PARTIES. The execution and delivery
of this Agreement and of each Subsequent Purchase Agreement shall constitute an
acknowledgment by AFL and ARFC that they intend that each assignment and
transfer herein and therein contemplated constitute a sale and assignment
outright, and not for security, of the Initial
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Receivables and the Initial Other Conveyed Property and the Subsequent
Receivables and Subsequent Other Conveyed Property, as the case may be,
conveying good title thereto free and clear of any Liens, from AFL to ARFC, and
that the Initial Receivables and the Initial Other Conveyed Property and the
Subsequent Receivables and Subsequent Other Conveyed Property shall not be a
part of AFL's estate in the event of the bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, or the occurrence of another similar
event, of, or with respect to, AFL. In the event that such conveyance is
determined to be made as security for a loan made by ARFC, the Trust or the
Noteholders to AFL, the parties intend that AFL shall have granted to ARFC a
security interest in all of AFL's right, title and interest in and to the
Initial Receivables and the Initial Other Conveyed Property and the Subsequent
Receivables and Subsequent Other Conveyed Property, as the case may be, conveyed
pursuant to Section 2.1 hereof or pursuant to any Subsequent Purchase Agreement,
and that this Agreement and each Subsequent Purchase Agreement shall constitute
a security agreement under applicable law.
SECTION 6.11. GOVERNING LAW. This Agreement shall be construed in
accordance with, the laws of the State of New York without regard to the
principles of conflicts of laws thereof, and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
SECTION 6.12. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.13. CONVEYANCE OF THE INITIAL RECEIVABLES AND THE INITIAL
OTHER CONVEYED PROPERTY TO THE TRUST. AFL acknowledges that ARFC intends,
pursuant to the Sale and Servicing Agreement, to convey the Initial Receivables
and the Initial Other Conveyed Property, together with its rights under this
Agreement, to the Trust on the date hereof. AFL acknowledges and consents to
such conveyance and waives any further notice thereof and covenants and agrees
that the representations and warranties of AFL contained in this Agreement and
the rights of ARFC hereunder are intended to benefit the Security Insurer, the
Owner Trustee, the Indenture Trustee, the Trust, and the Noteholders. In
furtherance of the foregoing, AFL covenants and agrees to perform its duties and
obligations hereunder, in accordance with the terms hereof for the benefit of
the Security Insurer, the Owner Trustee, the Indenture Trustee, the Trust, and
the Noteholders and that, notwithstanding anything to the contrary in this
Agreement, AFL shall be directly liable to the Owner Trustee and the Trust
(notwithstanding any failure by the Servicer, the Backup Servicer or ARFC to
perform its duties and obligations hereunder or under the Sale and Servicing
Agreement) and that the Owner Trustee may enforce the duties and obligations of
AFL under this Agreement against AFL for the benefit of the Security Insurer,
the Trust, and the Noteholders.
SECTION 6.14. NONPETITION COVENANT. Neither ARFC nor AFL shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Trust (or, in the
case of AFL, against ARFC) under
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any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust (or ARFC) or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Trust (or ARFC).
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IN WITNESS WHEREOF, the parties have caused this Receivables
Purchase Agreement and Assignment to be duly executed by their respective
officers as of the day and year first above written.
ARCADIA RECEIVABLES FINANCE CORP.,
as Purchaser
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
ARCADIA FINANCIAL LTD., as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
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SCHEDULE A
SCHEDULE OF INITIAL RECEIVABLES
[Schedule is maintained in transactional files.]
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF AFL
1. CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) was
originated by a Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business and such Dealer had all necessary licenses and
permits to originate Receivables in the state where such Dealer was located, was
fully and properly executed by the parties thereto, was purchased by AFL from
such Dealer under an existing Dealer Agreement with AFL and was validly assigned
by such Dealer to AFL, (B) contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for realization
against the collateral security, and (C) is fully amortizing and provides for
level monthly payments (provided that the payment in the first Monthly Period
and the final Monthly Period of the life of the Receivable may be minimally
different from the level payment) which, if made when due, shall fully amortize
the Amount Financed over the original term.
2. NO FRAUD OR MISREPRESENTATION. Each Receivable was originated by
a Dealer and was sold by the Dealer to AFL without any fraud or
misrepresentation on the part of such Dealer in either case.
3. COMPLIANCE WITH LAW. All requirements of applicable federal,
state and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇
Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers'
and Sailors' Civil Relief Act of 1940, the Minnesota Motor Vehicle Retail
Installment Sales Act, and state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code and other consumer credit laws and equal credit
opportunity and disclosure laws) in respect of all of the Receivables and each
and every sale of Financed Vehicles, have been complied with in all material
respects, and each Receivable and the sale of the Financed Vehicle evidenced by
each Receivable complied at the time it was originated or made and now complies
in all material respects with all applicable legal requirements.
4. ORIGINATION. Each Receivable was originated in the United
States.
5. BINDING OBLIGATION. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon, enforceable
by the holder thereof in accordance with its terms, except (A) as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (B) as such
Receivable may be modified by the application after the Initial Cutoff Date or
any Subsequent Cutoff Date, as the case may be, of the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended; and all parties to
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each Receivable had full legal capacity to execute and deliver such Receivable
and all other documents related thereto and to grant the security interest
purported to be granted thereby.
6. NO GOVERNMENT OBLIGOR. No Obligor is the United States of
America or any State or any agency, department, subdivision or instrumentality
thereof.
7. OBLIGOR BANKRUPTCY. At the Initial Cutoff Date or each
Subsequent Cutoff Date, as applicable, no Obligor had been identified on the
records of AFL as being the subject of a current bankruptcy proceeding.
8. SCHEDULE OF RECEIVABLES. The information set forth in the
Schedule of Receivables has been produced from the Electronic Ledger and was
true and correct in all material respects as of the close of business on the
Initial Cutoff Date or each Subsequent Cutoff Date, as applicable.
9. MARKING RECORDS. By the Closing Date or by each Subsequent
Transfer Date, as applicable, AFL will have caused the portions of the
Electronic Ledger relating to the Receivables to be clearly and unambiguously
marked to show that the Receivables constitute part of the Trust Property and
are owned by the Trust in accordance with the terms of the Sale and Servicing
Agreement.
10. COMPUTER TAPE. The Computer Tape made available by AFL to ARFC,
the Owner Trustee and the Indenture Trustee on the Closing Date or on each
Subsequent Transfer Date was complete and accurate as of the Initial Cutoff Date
or Subsequent Cutoff Date, as applicable, and includes a description of the same
Receivables that are described in the Schedule of Receivables.
11. ADVERSE SELECTION. No selection procedures adverse to the
Noteholders were utilized in selecting the Receivables from those receivables
owned by AFL which met the selection criteria contained in the Sale and
Servicing Agreement.
12. CHATTEL PAPER. The Receivables constitute chattel paper within
the meaning of the UCC as in effect in the States of Minnesota and New York.
13. ONE ORIGINAL. There is only one original executed copy of each
Receivable.
14. RECEIVABLE FILES COMPLETE. There exists a Receivable File
pertaining to each Receivable, and such Receivable File contains (a) a fully
executed original of the Receivable, (b) a certificate of insurance, application
form for insurance signed by the Obligor or a signed representation letter from
the Obligor named in the Receivable pursuant to which the Obligor has agreed to
obtain physical damage insurance for the Financed Vehicle, or copies thereof,
(c) the original Lien Certificate or application therefor and (d) a credit
application signed by the Obligor, or a copy thereof. Each of such documents
which is required to be signed by the Obligor has been signed by the Obligor in
the appropriate spaces. All blanks on any form have
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been properly filled in and each form has otherwise been correctly prepared.
The complete file for each Receivable currently is in the possession of the
Custodian.
15. RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No provisions of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified as
a result of application of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
16. LAWFUL ASSIGNMENT. No Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to transfers of the Notes.
17. GOOD TITLE. No Receivable has been sold, transferred, assigned
or pledged by AFL to any Person other than ARFC; immediately prior to the
conveyance of the Receivables to ARFC pursuant to this Agreement or any
Subsequent Purchase Agreement, as applicable, ARFC or AFL had good and
indefeasible title thereto, free and clear of any Lien, and immediately upon the
transfer thereof, ARFC shall have good and indefeasible title to and will be the
sole owner of each Receivable, free of any Lien. No Dealer has a participation
in, or other right to receive, proceeds of any Receivable. AFL has not taken
any action to convey any right to any Person that would result in such Person
having a right to payments received under the related Insurance Policies or the
related Dealer Agreements or Dealer Assignments or to payments due under such
Receivables.
18. SECURITY INTEREST IN FINANCED VEHICLE. Each Receivable created
or shall create a valid, binding and enforceable first priority security
interest in favor of AFL in the Financed Vehicle. The Lien Certificate and
original certificate of title for each Financed Vehicle show, or if a new or
replacement Lien Certificate is being applied for with respect to such Financed
Vehicle, the Lien Certificate will be received within 180 days of the Closing
Date or any Subsequent Transfer Date, as applicable, and will show, AFL named as
the original secured party under each Receivable as the holder of a first
priority security interest in such Financed Vehicle. With respect to each
Receivable for which the Lien Certificate has not yet been returned from the
Registrar of Titles, AFL has received written evidence from the related Dealer
that such Lien Certificate showing AFL as first lienholder has been applied for.
AFL's security interest has been validly assigned by AFL to ARFC pursuant to
this Agreement or any Subsequent Purchase Agreement, as applicable. Immediately
after the sale, transfer and assignment thereof by ARFC to the Trust, each
Receivable will be secured by an enforceable and perfected first priority
security interest in the Financed Vehicle in favor of the Trust as secured
party, which security interest is prior to all other Liens upon and security
interests in such Financed Vehicle which now exist or may hereafter arise or be
created (except, as to priority, for any lien for taxes, labor or materials
affecting a Financed Vehicle). As of the Initial Cutoff Date or each Subsequent
Cutoff Date, as applicable, there were no Liens or claims for taxes, work,
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labor or materials affecting a Financed Vehicle which are or may be Liens prior
or equal to the lien of the related Receivable.
19. ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) required to be made by any Person and actions required to be taken
or performed by any Person in any jurisdiction to give the Trust a first
priority perfected lien on, or ownership interest in, the Receivables and the
Other Conveyed Property have been made, taken or performed.
20. NO IMPAIRMENT. AFL has not done anything to convey any right to
any Person that would result in such Person having a right to payments due under
a Receivable or otherwise to impair the rights of ARFC, the Trust, the Indenture
Trustee, the Security Insurer and the Noteholders in any Receivable or the
proceeds thereof.
21. RECEIVABLE NOT ASSUMABLE. No Receivable is assumable by another
Person in a manner which would release the Obligor thereof from such Obligor's
obligations to AFL with respect to such Receivable.
22. NO DEFENSES. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense and no such right has been asserted
or threatened with respect to any Receivable.
23. NO DEFAULT. There has been no default, breach, violation or
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or both
would constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable, and there has been no waiver of any of the
foregoing. As of the Cutoff Date or any Subsequent Transfer Date, as
applicable, no Financed Vehicle had been repossessed.
24. INSURANCE. As of the date hereof or as of the date of any
Subsequent Purchase Agreement, as applicable, each Financed Vehicle is covered
by a comprehensive and collision insurance policy (i) in an amount at least
equal to the lesser of (a) its maximum insurable value or (b) the principal
amount due from the Obligor under the relate Receivable, (ii) naming AFL as loss
payee and (iii) insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by comprehensive and
collision coverage. Each Receivable requires the Obligor to maintain physical
loss and damage insurance, naming AFL and its successors and assigns as
additional insured parties, and each Receivable permits the holder thereof to
obtain physical loss and damage insurance at the expense of the Obligor if the
Obligor fails to do so. No Financed Vehicle was or had previously been insured
under a policy of Force-Placed Insurance on the Initial Cutoff Date or any
Subsequent Cutoff Date, as applicable.
25. PAST DUE. At the Initial Cutoff Date or any Subsequent Cutoff
Date, as applicable, no Receivable was more than 30 days past due.
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26. REMAINING PRINCIPAL BALANCE. At the Initial Cutoff Date or any
Subsequent Cutoff Date, as applicable, each Receivable had a remaining principal
balance equal to or greater than $500.00 and the Principal Balance of each
Receivable set forth in the Schedule of Receivables is true and accurate in all
material respects.
27. FINAL SCHEDULED MATURITY DATE. No Receivable has a final
maturity later than January 31, 2006.
28. CERTAIN CHARACTERISTICS. (A) Each Initial Receivable had a
remaining maturity, as of the Initial Cutoff Date, of at least 3 months but not
more than 84 months; (B) each Initial Receivable had an original maturity of at
least 6 months but not more than 84 months; (C) each Initial Receivable had an
original principal balance of at least $4,217.81 and not more than $39,491.20;
(D) each Initial Receivable had a remaining Principal Balance as of the Initial
Cutoff Date of at least $502.35 and not more than $39,299.11; (E) each Initial
Receivable has an Annual Percentage Rate of at least 7.50% and not more than
23.00%; (F) no Initial Receivable was more than 30 days past due as of the
Initial Cutoff Date; (G) no funds have been advanced by the Seller, the
Servicer, any Dealer, or anyone acting on behalf of any of them in order to
cause any Receivable to qualify under clause (F) above; (H) no Initial
Receivable has a final scheduled payment date on or before February 1, 1999;
(I) the Principal Balance of each Receivable set forth in Schedule of
Receivables is true and accurate in all material respects as of the Initial
Cutoff Date; (J) 18.1% of the Initial Receivables, by principal balance as of
the Initial Cutoff Date, was attributable to loans for the purchase of new
Financed Vehicles and 81.9% of the Initial Receivables was attributable to loans
for the purchase of used Financed Vehicles; (K) not more than 2.44% of the
Principal Balance of the Initial Receivables as of the Initial Cutoff Date had
an Annual Percentage Rate in excess of 21%; (L) none of such Receivables
represented loans in excess of $50,000.00; (M) not more than 0.4% of the
Aggregate Principal Balance of such Receivables represented loans with original
terms greater than 72 months; and (N) not more than 2.72% of the Aggregate
Principal Balance of such Receivables represented loans secured by Financed
Vehicles that previously secured a loan originated by AFL with an obligor other
than the current Obligor.
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